A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs
Fantastic news! We've Found the answer you've been seeking!
Question:
A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000. The firm's current fixed costs are $9,000 and current marginal cost are $15. The firm currently charges $18 per unit.
If the cost of capital is 5% then the net present value of the investment is
a.-$7,380.95
b.$6,020.41
c.$10,000
d.$7,380.95
Posted Date: